Two former Howard Hanna agents the brokerage sued last month have filed counterclaims alleging Howard Hanna is withholding their compensation after they were recruited by rival Compass.
In a March 23 amended complaint, Pittsburgh-based Howard Hanna alleged New York City-based Compass aided and abetted three former Howard Hanna agents — Michael Hornung, Jennifer Crouse and Leah George — to breach non-compete, non-solicitation and confidentiality provisions in the agents’ contracts with Howard Hanna and steal the brokerage’s trade secrets in order to burnish Compass’s image as a disruptive tech company in advance of its initial public offering.
The allegations are similar to those made by Zillow against Compass in an April 2019 lawsuit that ultimately settled and in a July 2019 suit filed by Realogy against Compass that is ongoing. Meanwhile, high-end Los Angeles-based brokerage The Agency accused Compass in a lawsuit Friday of illegally trying to prevent The Agency’s new president from soliciting Compass agents.
In answers to Howard Hanna’s complaint, Compass, Hornung, Crouse and George denied the allegations against them and asked the court to dismiss Howard Hanna’s claims.
“[T]he Compass Defendants explicitly require new employees not to disclose trade secrets and/or confidential information of prior employers to the Compass Defendants,” attorneys for the defendants wrote.
“Defendants deny that they have interfered with Plaintiff’s relationships with its managers and/or real estate agents, deny that the hiring or contracting with of Plaintiff’s former managers or agents constitutes actionable conduct, [and] deny that they have used or are aware of any unlawfully seized confidential, proprietary and trade secret information of Plaintiff,” they added.
The defendants also denied offering former Howard Hanna managers or agents incentives to recruit more managers or agents from Howard Hanna, as alleged in the complaint.
Additionally, Crouse filed a counterclaim accusing Howard Hanna of breach of contract and unjust enrichment for not paying her the commissions she is allegedly entitled to under her sales associate agreement with Howard Hanna.
According to the counterclaim, eight sales that Crouse was involved with at Howard Hanna have closed since she left the brokerage on March 2. Under the agreement, Crouse should have received 50 percent of the commission that would have been payable to her had she stayed with Howard Hanna, which adds up to about $28,892.50 total for those eight sales, according to the counterclaim.
“To date, Howard Hanna has not paid Crouse her share of the commissions it has collected on these sales,” the counterclaim said. “As a result of Howard Hanna’s breach, Crouse is entitled to damages in the amount of $28,892.50, plus interest.”
Hornung filed a separate answer and counterclaim against Howard Hanna. It was likely separate because both Hornung and Compass said Hornung had not, to date, begun his employment with Compass or acted on Compass’s behalf.
Hornung denied soliciting any Howard Hanna client or employee and denied that Compass encouraged him to breach his agreement with Howard Hanna.
“It is denied that Compass solicited Hornung to misappropriate any trade secret or confidential information or provide any such information to Compass, it is further denied that Hornung misappropriated any Howard Hanna confidential, proprietary or trade secret information,” attorneys for Hornung wrote.
Howard Hanna’s complaint alleged that in the days before leaving to go to Compass, Hornung emailed himself the profit and loss report for Howard Hanna’s Adams Township/Seven Fields and Butler locations and the email addresses of at least 80 Howard Hanna agents and ran weekly office sales reports, production reports, budget reports and insurance reports. Hornung admitted to accessing this information but denied that his actions were improper or unlawful.
“It is admitted that Hornung accessed Howard Hanna information within the regular course and scope of his employment,” his attorneys wrote. “It is denied that Hornung accessed any Howard Hanna information improperly or for purposes of providing such information to Compass. It is denied that Hornung copied any trade secret or confidential information of Howard Hanna.
“It is admitted that Hornung emailed himself a profit and loss report as proof of his own earnings, as well as a non-confidential list of Howard Hanna employee contacts. It is denied that he shared such information with Compass or any third party.”
Hornung’s attorneys claim Howard Hanna’s lawsuit is intended to get back at him for resigning.
“The within action was designed to intentionally tarnish Hornung’s reputation and cause him financial harm in retaliation for his decision to resign as evidenced by the threatening voicemail Hornung received from Thomas Ceponis, the Howard Hanna President for Pennsylvania, in which Ceponis told Hornung ‘he was going to be sorry’ that he resigned,” they wrote.
Hornung’s counterclaim alleges breach of contract, violation of Pennsylvania’s Wage Payment and Collection Law and unjust enrichment because Howard Hanna allegedly did not pay Hornung tens of thousands of dollars he was entitled to under his manager agreement with the brokerage.
This includes $9,600 in profit share for the fourth quarter, $12,700 in profit share for January, $6,000 in profit share for February, salary payments of $1,875 and $750 due to him when he resigned on Feb. 27, and two years’ worth of incentive compensation estimated at about $20,000 to $25,000.
“Howard Hanna made the decision to intentionally withhold Hornung’s wages, share of profits and incentive compensation that he had earned and was entitled to without any legitimate basis to his great financial detriment,” the counterclaim said.
“Howard Hanna initiated the within litigation against Hornung a few days [after Feb. 27]. Howard Hanna effectively made good on Ceponis’ threat that they were going make Hornung sorry he resigned,” the counterclaim added.
In an emailed statement, a Compass spokesperson told Inman, ““Agents have the right to choose their brokerage affiliation, including those who choose to join Compass. We are solely focussed on helping our agents grow their businesses and believe that meritless litigation that seeks to distract us from that focus will be unsuccessful.”
Howard Hanna did not respond to an emailed request for comment for this story. Hornung and Crouse declined to comment.
Editor’s note: This story has been updated with a comment from Compass and declinations to comment from Hornung and Crouse.